For certain retail products, such as automotive fuel, pricing adjustments occur on a frequent basis. It is not uncommon to see fuels prices vary on a weekly and, sometimes, daily basis. These pricing adjustments are dictated by many factors; foremost are fuel costs and competitive pricing in the retail market.
In the retail fuel market in order to assess whether a price adjustment is warranted the retail site must determine what the current fuel price is at competitor sites. Traditionally, this has meant that the retail site must survey their predetermined competitors for current pricing information and report such data to price administrator who determines whether a price adjustment is warranted. A retail site representative will conduct a survey by visiting the competitors in the area and noting the current fuel prices. Surveys are typically conducted on a daily basis and the information is then transmitted to the price administrator, typically by an electronic means, such as electronic mail (email), facsimile (fax) or the like. More recently, Internet or corporate network based price survey mechanisms have been implemented to convey current competitor pricing information from the retail site to the price administrator.
The price administrator is typically located at a central or corporate headquarters office and is responsible for determining pricing of all or a percentage of the retail sites operated within the corporation's chain of sites. Once the price administrator receives the price survey information a manual determination is made whether to adjust prices based upon the price survey, fuel costs and other factors effecting fuel pricing. If a pricing change is warranted the price administrator typically conveys the price change, telephonically or by other electronic means, to the district manager responsible for the retail site who then, in turn, conveys the price change information to the retail site. The current system and method relies on the manual determination of the price administrator to determine if price adjustments are warranted. These manual determinations are susceptible to human error and reliance upon preconceived notions of which of the competitor pricings are most significant. In addition, the manual determination of pricing adjustments is an inefficient process that relies on daily manipulation by the price administrators of pricing information for each retail site to determine if price adjustment is warranted.
Once the retail site has been notified that a price change has been authorized, price changes are implemented by manually changing the prices at the fuel pumps and on the fuel advertising signs in the vicinity of the retail sites. Typically, price changes are implemented at the beginning of the business day or at another set time of day. Manually changing the prices at the fuel pumps and associated advertising signs is an inefficient means of implementing price changes for a commodity, such as retail fuel, that changes price on a frequent basis.
A need exists to develop a price management system that is instrumental in pricing products, such as retail fuel, that are susceptible to frequent price fluctuation. The system should be capable of automated price adjustment analysis that relies on statistical data to determine whether a price adjustment is required. Such an automated process will provide for efficient, real-time determination of price adjustments that do not rely on human bias or are susceptible to human error. In addition, the desired pricing system should provide for an automated means of changing prices at the point-of sale. In the retail fuel sale context, this would mean automatically changing the prices at the fuel pumps and at the associated advertising signs. Such automated pricing changing, should be capable of being implemented at the central pricing office or at the retail site. As such, pricing changes would be implemented immediately upon a determination that a price change is required and the central pricing office would be immediately notified that the pricing changes has effectively occurred.
The need exists to develop a price management system that will take into account various sales factors, determine whether a price adjustment is required for specific retail sites and automatically adjust the price at the point of sale (i.e. at the fuel pump and/or the retail site advertising signs). These sales factors include, but are not limited to, competitor pricing, volume of sales at retail sites, cost of the product being sold and state and federal laws. In order for such a system to be successfully implemented, the pricing adjustments must be determined and implemented efficiently due to the unstable nature of cost of the commodity and competitor pricing. Retail sites must be able to provide current competitor pricing information and current sales information to a centralized pricing unit, which uses this site-specific information along with other site-specific and generic pricing related information to determine whether a price adjustment is warranted. Upon determination that a price adjustment is necessary the centralized pricing unit must convey the information to the retail site and affect an automatic adjustment on the price at the point-of sale.